The problem, though, is that the prospectus is so comprehensive that it can be hundreds of pages thick and overwhelming. That's why savvy IPO investors know what parts to zero in on.

IPO investors should always understand a company's growth trend and rate before buying in. Even if a company is young, it will provide at least a few years of financial results.

If you're going to pay up for the stock, you want to make sure the company is growing fast and that growth can continue.

And once you've bought the stock, be sure to keep a close eye on the company's bottom line and valuation. Investors can often sour on recent money-losing IPOs quickly, so if the company is in the red, you don't want to be the last one to sell.